FDI, GROWTH AND THE ROLE OF GOVERNANCE: CHANGING THE RULES OF THE GAME

Constantina Kottaridi

Contributions to Political Economy, 2005, vol. 24, issue 1, 79-98

Abstract: This paper synthesises theoretical predictions on economic globalisation with the International Business and Economics disciplines in order to provide new insights on the link between Foreign Direct Investment (FDI) and growth. We empirically investigate the impact of foreign investment on recipient EU economies for the last two decades, based on the correspondence principle between organisational hierarchical pyramids and the hierarchical structure of the global economy. Our results are supportive of a bi-polar EU where the higher value-added activities are concentrated in core countries. We claim that there is a need for re-evaluating existing governance so that peripheral economies can improve their domestic characteristics, e.g. by enlarging their human capital basis, and be able to attract and maintain FDI. Copyright 2005, Oxford University Press.

Date: 2005
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